THE OUTLOOK FOR HEALTH CARE IN 2023:

What you need to know about the forces reshaping our industry.

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August 23, 2022

Health care's biggest business risks, charted

Daily Briefing

    Cybersecurity and talent acquisition and retention were the two biggest business risks cited by U.S. executives in PwC's latest Pulse Survey—and though health care leaders shared these concerns, other factors are also top-of-mind. See how health care's challenges compare with other industries on our interactive chart.

    How executives feel about the current business environment

    For the survey, PwC surveyed 722 executives from both public and private companies across six sectors, including health care, between Aug. 1 and Aug. 5. In total, health industry executives represented 7% of all respondents.

    According to the survey, executives identified several ongoing risks to their companies, with more frequent and broader cyberattacks topping the list at 40%. Other major risks include talent acquisition and retention (38%), rising production costs (34%), supply chain disruptions (34%), and inflation reducing consumer demand (31%).

    Going forward, many executives (83%) said they planned to focus their business strategy on growth. To do this, executives reported increasing investments in several areas, including digital transformation (53%), IT (52%), cybersecurity and privacy (48%), and customer experience (48%).

    In addition, 63% of executives said they have changed or are planning to change their business processes to address labor shortages, up from 56% who said the same in January. To attract new workers, some changes companies are considering include:

    • Expanding remote work options (70%)
    • Increasing compensation for current employees (64%)
    • Expanding mental health benefits (62%)
    • Creating custom HR strategies for different employee types (59%)
    • Acquiring new companies to gain access to new talent (52%)

    But despite concerns about hiring and retaining talent, executives also reported efforts to streamline their workforces, with 50% saying they are reducing overall headcounts. In addition, 46% said they are eliminating or reducing signing bonuses, and 44% are rescinding job offers.

    However, these precautionary layoffs are more prevalent in certain industries than others, PwC reports. And health care leaders are focusing on rehiring employees who have recently left.

    Overall, PwC notes that "[a]fter more than two years dealing with uncertainty related to the pandemic, business leaders recognize the urgent need to focus on growth in order to compete, and they're zeroing in on what they can control."

    The top business risks in health care

    Like executives in other industries, 43% of health care executives said cyberattacks were the most serious risk to their businesses. According to IBM's Cost of a Data Breach report, the health care industry is the most significantly affected by data breaches, with each breach costing companies an average of $10.1 million.

    To reduce the risk of cyberattacks, more companies are beginning to use real-time detection and defense technology. In fact, roughly a quarter of health industry executives said they have already seen benefits from using AI in their companies' cyber defense.

    Compared to other executives, health industry executives ranked both supply chain disruptions and tax policy as more serious business risks. In particular, pharmaceutical and life sciences companies will likely have to develop tax strategies to prepare for the Inflation Reduction Act, which includes provisions to reduce the cost of prescription drugs and health insurance.

    Other top business risks for the health industry include rising production costs and talent acquisition and retention. Unlike technology, media, and telecommunications companies, which is focusing on automation, health care companies are focusing on rehiring employees who left.

    Over the next year, health industry executives said they are planning to increase their investments in IT, digital transformation, and cybersecurity and privacy. Health industry executives were also more likely to say that they will increase investments in research and development and innovation in the next 12 months than other respondents. (Gamble, Becker's Hospital Review, 8/19; PwC Pulse Survey, 8/18)

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